SPX, COMPQ, INDU, NYA: All Diagonals Go to Heaven

Since last update, the market has continued floundering around like an electrocuted mackerel, trending sideways down, but unable to bounce.  Let's start off with INDU, which has broken down from an apparent double-top:

NYA also suggests that prices would normally be expected to run lower still.  The diagonal I suggested back in November (when it was still forming) ended up being the real deal:

COMPQ is below its major uptrend line:

COMPQ has exceeded its targets, but if NYA and INDU run lower, COMPQ will too:

And the SPX diagonal I called out right before the top has also ended up being real, despite failing to overthrow its upper trend line:

In conclusion, one would think we'd get a bounce somewhere in here, but both COMPQ and SPX are still within their crash channels -- and as I noted a week ago, the "first step for bulls" is to break out of that.  Bigger picture, NYA and INDU both suggest that even if we bounce, the decline is probably not over, with lower prices likely to follow any bounces.  Trade safe.

SPX, COMPQ, INDU: Getting Closer

Since last update, the market has continued to drop like a water balloon, and SPX has captured and exceeded both its common first targets:

COMPQ is looking shakier, though not QUITE to its key overlap yet:

And INDU's whipsaw of blue was indeed a serious warning sign:

In conclusion and in short:  Bulls are running out of real estate rapidly.  If they can't pull out of this tailspin soon, then it will become increasingly likely that a major bear market just began.  We'll give them a little more breathing room, but right now things are looking pretty awful for them.  In the event this was the start of that major bear, we could ultimately retrace most of the rally that began in 2022... and if this is the start of a secular bear (a distinct possibility, given the wave positions in the big picture), we might not see current levels again for many years.  Just something to keep in the back of one's mind.  Trade safe.

SPX and COMPQ: Changing the Clocks is an Obvious Practical Joke

Just a short update today because I forgot the mainland was going to do their Daylight Wasting Time time change.  Hawaii doesn't observe DST, so this change means the market shifts from opening at 4:30 a.m. to opening at 3:30 a.m. here.  In other words:  Normally, the market doesn't open for another half an hour or so.

Anyway, hence the short (and slightly late) update, starting with COMPQ:

And ending (yes, already!) with SPX:

Luckily, there's not a lot to add to Friday's update anyway.  But my apologies for the misstep, and Wednesday I'll be back on track.  Trade safe.

SPX, INDU, COMPQ: The Bad News Bears

Since last update, SPX made a slight new low, while COMPQ and INDU retested their lows.  Before we look at those charts, though, here's a "let's keep it simple" chart.  SPX is currently in a crash channel:

COMPQ tested, but is still holding above, its first key overlap:

And INDU is probably the clearest indicator that the current drop is only 3 waves down (so far):

Probably the most noteworthy thing to come out of all of this is that while SPX made a new low, it appears to have done so in only three waves (coming down from Tuesday's 5865 high).  This implies that in the event it bounces directly (first target 5875-5904), then that will leave a b-wave low that would need to be resolved with another new low.  If it doesn't bounce directly, then it's likely going to need to run south of 5600 in order to create the requisite 5-waves down from 5865.

In other words, it appears more likely than not that bears still have the ball for now, one way or the other -- though a b-wave low and bounce would give bulls a short-term reprieve.  Trade safe.

SPX, COMPQ, INDU Updates: Bulls on Fumes

Last update again called attention to INDU's long-term blue trend line as the zone bulls would need to reclaim to keep their hopes alive for the near term, but that trend line proved too much for them and acted as resistance:

COMPQ has now effectively completed its blue "more bearish" projection from January:

Big picture, bulls are trying (again) to stage a rally, this time at COMPQ's first meaningful overlap.  It's almost like the market knows where these levels are (wink):

SPX has now captured its first diagonal target:

In conclusion, COMPQ and SPX have now both captured their "more bearish" targets.  This leaves the two options discussed in brief on the SPX chart.  The most bearish option now shifts from "decent correction" to "major bear market may have just started."  Due to the lack of sustained trade beneath any of the key overlaps (and a few other things), I'm going to hold off on at making that call just yet -- but just know that it's actually on the table in a very real way now, for the first time in years.  We'll see how the market handles things from here.  Trade safe.

SPX, INDU, COMPQ: INDU Target Now Officially Captured as Well

Last update noted that "this is where bulls need to get their acts together" -- and they did exactly that, staging a strong rally after INDU's February 14 target was captured:

Note that the next significant test for bulls on the upside will be the old long-term trendline:

SPX behaved just like it did in early February.  Its next real test (for bulls) will be the red line:

Finally, COMPQ likewise bounced at its long-term trend line:

In conclusion, while we anticipated these zones with high accuracy, Friday's bounce solidifies them as being correctly identified (one never knows for sure until the market 1) gets to the zone and 2) reacts).  So, at this point, the lines bears need really couldn't be any more clear.  But this means that bulls have kept all their options open and could very well keep running with it, if the market chooses.  The next real tests are the red line for SPX and the old long-term blue line for INDU, so we'll see how the market reacts to those, if it gets there.  Trade safe.

SPX, COMPQ, and INDU Updates: Official Target Captured -- Here's What to Watch Next

Yesterday, SPX finally "officially" captured its first downside target and futures are trying to bounce from that zone, so nothing unrecoverable has happened for bulls yet... but in case bulls can't get their act together here, I'm going to cover what we'll be watching heading forward (later charts).

On this first chart, we can see SPX came down for a perfect kiss of the blue trend line:

Since this was the expected resolution of both the expanded flat and the diagonal (just the diagonal would keep dropping lower), this leaves the jury still out on which of those we're dealing with.

If we're dealing with the diagonal, I've outlined its targets in more detail:

Now, let's start to break into "hmm, that would be interesting" territory, starting with COMPQ, which is close to its very long term trend line.  If that breaks, it wouldn't have far to go before things start to look shakier for "el bulleroni" (this is Spit-alian, a combination of Spanish and Italian that I just made up and which bears equal similarities to neither language).  That's because COMPQ is dropping out of potential "bull 5" territory, so if it starts to knock out some key overlaps, it could signal an end to the long, slow bull market that began years ago.

Next, we have INDU's long-term chart, which shows the same problem -- that problem being that the most recent labels on the chart are 3s and 4s, which means we've been in wave 5.  

The near-term chart discusses the more bearish interpretation of the recent action -- but I do again need to stress that, so far, nothing has happened to indicate that the more bearish interpretation is more valid than the less bearish interpretation.

Finally, if COMPQ keeps following the blue path, it may get into the ballpark of creating problems with at least the first key overlap.

In conclusion, the market did continue lower to capture its "official" downside target -- and this (with a little wiggle room) is where bulls need to get their acts together.  While the market can support lower prices to a point, if it gets into key overlaps, the picture is going to start to look shakier for bulls and we may need to consider the idea that the 5th wave we've been watching for a while has finally ended.  And that would bring the potential of a recession and more.  Trade safe.